Amns Gandhidham Ltd. Vs ACIT (Bombay High Court)
The Bombay High Court examined whether income-tax assessment proceedings for Assessment Years (AYs) 2022-23 and 2023-24 could continue against the petitioner after approval of a resolution plan under the Insolvency and Bankruptcy Code (IBC). Following the filing of the writ petition, the petitioner was amalgamated with ArcelorMittal Nippon Steel India Private Limited, and a formal amendment reflecting this change was permitted. Respondents waived service, and the matter was taken up for final hearing.
The petitioner argued that the assessment proceedings should be quashed because, once the resolution plan was approved by the National Company Law Tribunal (NCLT) on 13 April 2023, all claims not forming part of the plan stood extinguished. The plan was subsequently upheld by the NCLAT on 11 September 2023 and by the Supreme Court on 6 November 2023, thus attaining finality. During the Corporate Insolvency Resolution Process (CIRP), the Interim Resolution Professional notified the Principal Commissioner of Income Tax on 27 June 2022 about the ongoing proceedings, but the tax authorities did not file any claims for the relevant years.
The petitioner submitted that the approved resolution plan expressly prohibited initiation or continuation of proceedings relating to periods prior to the plan’s implementation date of 6 May 2023. The plan was also brought to the notice of the tax authorities in July 2024 and January 2025 in response to statutory notices. The petitioner argued that the “clean-slate” principle required that carry-forward of losses be allowed, because denial of losses would effectively impose future tax demands arising from pre-resolution periods, contrary to the approved resolution plan. Since the Principal Commissioner was given an opportunity under Section 79(2)(c) of the Income-tax Act but raised no objections during the CIRP, the revenue could not reopen the issue during assessment.
